Says Congress responsible for Postal Service woes

March 7, 2013

The latest announcement by the Postmaster General requires a little background. And by the way, neither the Postmaster General, nor anyone else, can unilaterally enforce a switch to 5-day delivery without Congress's approval.

Prior to 2006, Congress had unfairly forced the Postal Service to pay for pensions earned by employees for their service in the military. This money should have been paid by the Treasury. (In 2012, the proportion of letter carriers who served in the military stood at 21 percent.

The veteran population peaked in the 1980s when half of all carriers were veterans.) The Postal Accountability and Enhancement Act of 2006 was passed to fix that, returning billions to the Postal Service. But because Congress decided that the bill must be budget-neutral, they concocted a scheme designed to continue the flow of postal funds into the Treasury's ledger.

In that same bill, they required the Postal Service to fork over $5.5 billion (yes, that's $5,500,000,000) every year to pre-fund 75-years' worth of future retiree health benefits within 10 years; a burden that no other company or agency is required to do, not even Congress. (How many companies do you know that are setting aside funds for employees who retire 75 years from now?) Because the Postal Service has been an independent agency of the government since 1971, it makes all its money from postage sales and services and pays its own bills.

At the time the bill was passed, the USPS could afford it, so it wasn't a problem until the economy sank into recession. The law never took into account the problems that every business has faced since the recession began - reduced revenue.

Yet every year, the Postal Service has been required to hand over $5.5 billion to pad Congress's coffers and feed their budget until the USPS has had to hand over all of its operating capital, all of its $15 billion borrowing authority and now has "defaulted" for the past 2 years on the pre-funding requirement. By the way, that pre-funding account already has $45 billion in it enough to take care of retiree health benefits for decades BUT THE POSTAL SERVICE ISN'T ALLOWED TO USE IT UNTIL 2016. Nice for Congress, right?

Congress created this mess when it continued to siphon off all the money that the Postal Service had, and turn its collective cheek when a phony "default" resulted. The USPS' money crisis has very little to do with being able to operate effectively and almost everything to do with this crippling and unnecessary pre-funding mandate (although use of e-mail has reduced 1"-class mail, e-commerce and the resulting shipping revenue is up 8.7%). For members of Congress (not all of them) to look at the Postal Service's financial situation and pretend they don't know what's causing it is sheer laziness and an unwillingness to do the right thing.

And as for Postmaster General Patrick Donahoe flouting Congress's authority and the needs of customers and the institution's welfare in the long run, I can only wonder what kind of sweet deal he has waiting for him at FedEx or UPS when he's finished "serving" the Postal Service.